This study finds that diversified firms in New Zealand are of lower value and perform more poorly than undiversified firms, using a sample from 1993-2005. Furthermore, the lower value of diversified firms cannot be explained by their poorer performance or by agency conflicts. However,

there is no evidence that supports diversified firms being of lower value or performing poorly in comparison to undiversified firms, once the endogeneity of diversification is controlled for. These findings suggest that while diversified firms are associated with lower value and poor